On 12th May 2011 when SIA announced its FY11 earning, an almost 5x jump in profit as compared with FY10 despite a 30% drop in profit for 4Q11 ( compared with 4Q10 ) due to higher fuel cost and lower passenger load, it also announced a record dividend payout $1.40/share for FY11 ( $0.40/share final dividend, $0.80/share special dividend, $0.20/share interim dividend which already paid ). The big payout was not a surprise due the amount of free cash SIA has which equivalent to $4+/share. As such, SIA share will be in focus from now till it goes XD on 2nd August 2011. The dividend of $1.40/share with reference to 13th May 2011 closing price of $14.66 is equal to a dividend yield of 9.55%.
The rising crude oil price for past months has no doubt squeezing SIA profit margin even with the hedging of fuel cost and with factors like competition from budget airlines, other branded airlines and impact of Japan traveling due to the natural disaster in March, SIA will be facing challenging for FY2012 in term of earning.
With the bumper dividend supporting the share price and coupling with stock markets uncertainties within the next few months ( US economy recovery, Euro zone debts and Asia inflation concern ) SIA might be presenting good trading opportunity to short-term investors.
Technically, $14.58 is the 200d EMA for SIA share price which it managed to break on 13th May 2011 once the announcement of the bumper dividend. This level will be one line of support. Trading buying signal will be valid between $14.00 - $14.20 level. Fundamental buy signal is $13.50 and below ( regardless of bumper dividend or not ). A first level of resistance to the upside will be at $15.30 and once that is broken, the next will be at $16.00. Hence, the trading range for SIA with the bumper dividend supporting would be $14/$14.20 to $15.30 and the next will be $15.30 to $16.00 till it goes XD on 2nd August 2011.
The minimum bid size for SIA is 2 cents/bid and hence it is normal for it to swing +/- 20cents within a day. Investors are advised to have tolerance for such a swing when trading with SIA.
